A capitalization rate is derived in appraisal by:
Why Analyzing sales of comparable income properties and extracting the relationship between NOI and sale price Is Correct
Answer B: Analyzing sales of comparable income properties and extracting the relationship between NOI and sale price
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
Key Property Valuation Terms in This Question
People Also Study
Related Arizona Questions
- An Arizona appraiser is valuing a historic adobe home. There are very few comparable sales and it generates no rental income. Which appraisal approach would MOST likely be given the most weight?Property Valuation
- In the sales comparison approach, an appraiser makes 'adjustments' to comparable sales. If a comparable sale has a pool and the subject property does NOT, the appraiser would:Property Valuation
- An Arizona property produces a Net Operating Income (NOI) of $120,000 per year. Using a capitalization rate of 6%, what is the estimated value?Property Valuation
- An Arizona homeowner wants to net $280,000 after paying a 6% commission. What is the minimum sale price needed?Real Estate Math
- In the income approach, a property generates $36,000 annual net operating income (NOI). If the capitalization rate is 6%, what is the estimated value?Property Valuation
- A seller nets $312,000 after paying a 5% commission. What was the sale price of the property?Real Estate Math
- A seller nets $280,000 after paying a 6% commission. What was the sale price?Real Estate Math
- A commercial property has an NOI of $85,000. If it sells at a 7% cap rate, what is the sale price?Real Estate Math
Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Study This Topic
Practice More Arizona Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →